River bill hits rapids in D.C.

WASHINGTON -- Oil and gas producers working in the Gulf of Mexico would pay to help restore the San Joaquin River under a bill that encountered new difficulties Wednesday amid growing debate.

With the oil and gas industry mobilizing against the bill -- and San Joaquin Valley lawmakers arguing about it -- a key House committee canceled plans to approve it Wednesday morning. Lawmakers have given themselves one more week to salvage the legislation, which has struggled all year.

"We're still trying to work out some of the issues," said Rep. Jim Costa, D-Fresno.

The still-evolving bill would authorize levees, channel improvements and other work needed to allow more San Joaquin River water to flow below Friant Dam. With the river revived, salmon would be reintroduced by 2013.

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The plan settles a lawsuit filed in 1988 by environmentalists unhappy over the river's decline. Although the settlement could reduce irrigation deliveries by 19% annually, Friant-area irrigation districts endorsed it rather than let a federal judge allocate the water.

Ever since Rep. George Radanovich, R-Mariposa, introduced the first version of the bill in January, backers have sought ways to offset roughly half of its $500 million price tag to comply with House rules. The offsets can come either from new revenues or money diverted from other projects.

This week, Costa replaced Radanovich's bill with his own.

Radanovich's staff first saw the new bill language Tuesday, and the seemingly abrupt maneuver infuriated the Republican.

"I'm disappointed that it's become incredibly partisan," Radanovich said Wednesday. "It's turned into a very divisive issue now, and I regret that."

Costa, in turn, stressed that he has "worked with George for two years on this." Costa added, however, that his Resources Committee seat enables him to move the bill through the Democratic-controlled panel.

Costa's new bill called for some of the river restoration money to come from Friant-area farmers repaying their federal dam construction debt more quickly.

The new bill also levies a "conservation of resources" fee on certain oil-and-gas leases in the Gulf of Mexico.

For every acre that isn't currently producing oil or gas, the companies holding the lease would pay $3.75. This raises the current fees by between 40% and 60%.

Costa called the oil-and-gas fee a "temporary" solution, a placeholder designed to get the bill through committee. He indicated it probably would be replaced later by money from a nuclear energy industry cleanup fund.

The explanation did not mollify oil-and-gas lobbyists or Radanovich, who said the proposal "severely impacts" his support for the overall bill.

"I understand what the goal is," said Erik Milito, American Petroleum Institute spokesman and senior attorney. "We just oppose this fee they're trying to impose."

Joined by companies like Shell Oil Co. and Exxon Mobil Corp., the American Petroleum Institute frantically lobbied against the new bill this week.

The lobbyists charged that the new fee would violate existing contracts and deter necessary energy production.

The arguments resonated among Republicans, who were upset the new bill was sprung on them shortly before they were expected to vote.

"They really complicated it when they put this tax increase there," said Rep. Devin Nunes, R-Visalia. "We barely had time to look at it."

Radanovich further complained about Costa "virtually shutting me out of all conversations" regarding the new bill.

Feeling the pressure, committee leaders Wednesday morning canceled the markup about two hours before the panel was scheduled to start working. A makeup session has been set for Nov. 15, when Radanovich acknowledged committee Democrats could still "ram through" the measure on a party line vote.

"All of us have become frustrated with the lack of movement," Costa said.